How are co-counsel legal fees allocated when a settlement is shared between multiple law firms?

Co-Counsel Fee Splits in North Carolina Personal Injury Cases: The Complete Guide

Detailed Answer

North Carolina allows two or more law firms to share one contingency fee when they jointly represent an injured client. The governing rule is Rule 1.5(e) of the North Carolina Rules of Professional Conduct. To stay compliant, the firms and the client must meet all four requirements below:

1. Written Agreement. The total fee and each lawyer’s share must be spelled out in a signed fee agreement before or within a reasonable time after starting the representation.
2. Single, Reasonable Total Fee. The client pays one contingency fee that is reasonable under Rule 1.5(a). The firms decide how to divide that fee; the split cannot increase the percentage the client pays.
3. Joint Responsibility or Proportional Work. The firms may divide the fee either (a) in proportion to the work each performs, or (b) by accepting joint responsibility for the matter. In practice, most co-counsel agree to joint responsibility so they can use any split that is fair to them and transparent to the client.
4. Clientconsent. The client must consent in writing to the specific allocation. Without written consent, fee-splitting is prohibited.

How the Dollars Move

Assume a car-crash case settles for $300,000. The signed fee contract calls for a one-third contingency fee (33). Two law firms worked together and agreed to share the fee 60/40 based on time spent. The calculation looks like this:

• Gross settlement: $300,000
• Total attorney fee (33): $100,000
• Firm A receives 60 of $100,000 = $60,000
• Firm B receives 40 of $100,000 = $40,000
• Expenses advanced (if any) are reimbursed to the firm(s) that paid them before the remainder is disbursed to the client.

Is a “Referral Fee” Allowed?

North Carolina forbids pure referral fees. A lawyer who merely refers a case and does no work must still accept joint responsibility to share in the contingency fee. That means monitoring the case, staying available for client questions, and remaining on the pleadings if litigation is filed.

Common Allocation Methods

Method	When Used	Key Points
Proportional Work	Both firms track time or tasks	Fee split matches hours or task percentage; easier to justify if challenged.
Equal Split (50/50)	Firms share tasks roughly evenly or agree to joint responsibility	Permitted if total fee is still reasonable and client consents in writing.
Lead/Sub-Counsel Split	Lead firm handles litigation; sub-counsel handles client contact or local practice rules	Typical ratios are 70/30 or 60/40; document duties clearly.

Statutory Overlay

Personal-injury settlements that involve minors or wrongful-death claims may require court approval under N.C. Gen. Stat. 1-402 and N.C. Gen. Stat. 28A-13-3. When a judge must sign off, include the fee-split in the petition so the court can find the arrangement reasonable.

Helpful Hints

• Put the split percentage—and the fact that it will be taken from the agreed contingency fee—in bold type in the fee contract to avoid confusion.
• Keep time records even in contingency cases; they help defend the reasonableness of the allocation if later challenged.
• Update the client in writing if the split changes because another firm is added or drops out.
• Use one trust account ledger per firm. The settlement funds can be deposited into one firm trust account, then that firm disburses each share once the client signs the final settlement sheet.
• Never base a split on mere client ownership or volume of referrals; Rule 1.5(e) requires work or joint responsibility.

Take the Next Step

Fee-sharing is a powerful tool that lets you combine resources and maximize results for your personal-injury clients—but only if you follow North Carolina strict rules. Our attorneys regularly coordinate with co-counsel across the state to meet these requirements and protect everyone interests. If you have questions about structuring a compliant fee split—or any aspect of a North Carolina personal-injury claim—call us today at 919-313-2737. We ready to help.

• Prev Post
• Next Post